Top bosses at Standard Chartered admitted the bank’s performance had been disappointing as they announced plans to axe 100 branches in a $400m (£250m) cost-cutting drive to win back support from disgruntled investors.
The admission was made as the bank’s top management team began three days of presentations to investors, who have endured a 30% drop in share values.There are also concerns about whether the bank has enough capital.
At the start of the three-day presentation, the new finance director, Andy Halford, said: “We recognise our recent performance has been disappointing and are determined to get back on to a trajectory of sustainable, profitable growth, delivering returns above our cost of capital.”
Halford, a former telecoms executive who joined the bank only five months ago, said Standard Chartered had “enormous advantages” but had “refreshed and sharpened our strategy” as a result of market changes.
According to slides published on the bank’s website, Halford kicked off the presentations in Hong Kong. The chief executive, Peter Sands – one of the few bank bosses to survive the banking crisis – is not due to make a presentation to investors until Thursday, which could determine his future at the bank. There was no mention of any presentations by the bank’s chairman, Sir John Peace, who also chairs the retailer Burberry and who is also facing scrutiny from Standard Chartered investors. Peace is not thought to have made presentations at previous investor meetings.
The slides posted to accompany Halford’s presentation show that he addressed concerns about “capital accretion” and whether the management has taken tough enough action to stem the slide in performance at Standard Chartered, which until last year had produced 10 years of successive profits growth.
In the last 12 months there have been three warnings about profits; the most recent being last month.
Presentations by Halfords’ colleagues showed that the bank would cut up to 100 branches from the current 1,248-branch network next year. While Standard Chartered does not have a presence on UK high streets it is a familiar sight on streets across the emerging markets.
Sands has insisted that the bank does not need additional capital at a time when its growth is slowing and it is facing rising bad debt charges in some of its markets. The bank may also face fresh fines from the US authorities, which have reopened inquiries into breaches of sanctions with Iran, which cost the bank £415m in 2012.
Gary Greenwood, analyst at Shore Capital, said he was “inclined to side with management” on the issue of capital. “To our minds the market appears to be wrongly obsessed with the lack of progression about the [capital] ratio,” Greenwood said, pointing to the size of the bank’s leverage ratio, another measure of financial strength.
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